DOW JONES NEWSWIRES
Travelers Cos.' (TRV) second-quarter income fell 21% on lower
revenue and higher claims costs.
But the commercial and personal insurance provider still raised
its full-year earnings outlook, to $4.80 to $5.05 a share from its
earlier outlook of $4.55 to $4.95 a share.
Chairman and Chief Executive Jay Fishman said the company's
performance reflected "solid underwriting and fixed-income
investment results, as well as the continued impact of very low
short-term investment yields" and a small loss on its alternative
investment portfolio.
As the insurance sector has been roiled by its exposure to the
troubled stock and debt markets, Travelers has emerged as a company
that, despite also suffering from its investment and catastrophe
losses, is seen as one that can take advantage of its rivals'
weaknesses.
The company may face a challenge, as other insurers do, from
lower employee counts at customers. That would reduce premiums for
workers' compensation coverage, or shuttered factories, which could
mean less property coverage. Still, analysts have said Travelers
could benefit from a flight to quality, as customers seek out
insurers that have maintained a good credit rating.
Travelers - the second-largest U.S. commercial insurer behind
American International Group Inc. (AIG) in terms of market share as
measured by premiums - posted income of $740 million, or $1.27 a
share, down from $942 million, or $1.54 a share, a year earlier.
Operating income, which excludes net realized investment gains and
losses, fell to $1.25 from $1.50.
Revenue decreased 2.1% to $6.16 billion.
Analysts polled by Thomson Reuters expected earnings of $1.28
and revenue of $6.17 billion.
The combined ratio, the percentage of each dollar the company
collects in premiums that it pays out on losses or expenses, rose
to 93.2% from 89.3% excluding items such as catastrophes.
Net premiums written were flat at $5.61 billion. Return on
equity, a key measure of profitability, slid to 11.1% from
14.4%.
Travelers has replaced former parent Citigroup Inc. (C), from
which it sum off in 2002, on the Dow Jones Industrial Average, as
Citi's substantial restructuring will leave the government with
about a 34% stake.
Travelers' shares closed Wednesday at $42.63 and haven't traded
premarket.
-By Kerry Grace Benn, Dow Jones Newswires; 212-416-2353;
kerry.benn@dowjones.com